Chevron's Gorgon Plant Suffers Equipment Failure

Chevron's Gorgon LNG liquefaction plant in Australia has suffered a $75 million setback just as it begins production.

The West Australian reported Thursday that the plant has suffered a mechanical failure in the propane refrigerant circuit for its first LNG train, just after its inaugural cargo left for Japan, and that the repairs will mean the delay of its second shipment until the end of the month. 

A Chevron spokesman confirmed the news, and said that gas production at the site's Jansz-Io offshore field was as expected and development of the second and third trains was proceeding unaffected. The firm is investigating the cause of the equipment failure. 

Gorgon's development cost has risen due to delays and difficulties, growing to $54 billion from a projected $37 billion as first production slipped from 2014 until 2016. The site is a joint venture between Chevron, Exxon and Shell, with minor investments from Osaka Gas, Tokyo Gas and Chubu Electric Power. 

Chevron CEO John Watson has said that the plant will be profitable over the long term. "We expect legacy assets such as Gorgon will drive long-term growth and create shareholder value for decades to come," he said in March.  

Separately, American LNG firm Cheniere is preparing for its fifth export shipment of LNG at its Sabine Pass terminal in Louisiana. The LNG carrier BW GDF Suez Brussels is under way and expected to arrive April 5. 

Bloomberg has reported that Petrobras bought Cheniere's first cargo, and Indian firm GAIL received the second; the third is also set for delivery in Brazil, and the buyer of the fourth cargo is as-yet unknown. Cheniere intends to export eight shipments by May. 

On Friday, the Energy Atlantic, the vessel carrying the fourth shipment, was under way in the Caribbean  headed east south east with no listed destination.